Hands On Training For Farmers and Ranchers

Transcription

1 ooks Pr remi ier ckbo Quic Hands On Training For Farmers and Ranchers Class Instructors: DeDe Jones Jay Yates

2 Farmers Goals for QuickBooks Develop Balance Sheets and Profit & Loss Statements (Income Statements). Develop Better Management Practices.

3 Advantages of QuickBooks Ease of use. Double entry feature allows user to create a bl balance sheet. Manages accounts payable and accounts receivable. Easy to reconcile & produce reports. Enterprise accounting.

4 Why Not Quicken Instead? More for personal, not business finance. Focused on cash flow, difficult to produce a balance sheet. Cannot line up income and expenses (i.e. is not accrual based). First stage of QuickBooks is just as easy.

5 QuickBooks does allow for an easy conversion from Quicken

6 All the Accounting You Need to Know Assets Cash Liabilities Accrual Equity

7 Cash vs. Accrual Enter expenses when you pay them. Enter income when it is received. Tax-based Enter a bill when it is received, not when paid. Enter income when it is sold, not when you receive the money. Management orientated

8 Accrual Adjusted Entries Provides a more accurate overall financial picture by incorporating accrual entries into cash basis numbers: Accounts Receivable Accounts Payable Inventories Prepaid Expenses

9 Measuring Business Profitability Balance Sheet Profit and Loss Statement (Income Statement)

10 The Balance Sheet

11 The Balance Sheet Presents ASSETS - What the business owns LIABILITIES - What the business owes (debt) OWNER S EQUITY - What the owner is worth Owner s Equity = Assets - Liabilities

12 Balance Sheet Reports the business financial position on a certain day by determining: The ability to bear financial losses (risk). Business wealth or equity. The collateral for lenders in case of liquidation to meet debtors obligations. Information to address issues of estate planning, deferred tax obligation,,generational transfer and retirement.

13 Balance Sheet Components Assets Current Fixed Liabilities Current Long-Term Equity (Net Worth)

14 Balance Sheet Definitions Assets Current Assets are cash or items expected to be converted to cash in less than 12 months. EX. cash, savings, accounts receivable, inventory, stockers. Fixed Assets are not expected to be converted to cash during the normal course of the business year. EX. breeding stock, machinery, vehicles, and land.

15 Balance Sheet Definitions Liabilities Current Liabilities are financial obligations due within the coming fiscal year. EX. accounts payable, accrued interest, operating loan principle. Long-Term Liabilities are non-current (greater than one year) financial obligations. EX. principle due on a machinery or real estate loans. Th i t di t t There are no intermediate-term liabilities in QuickBooks

16 Most Important Accounting Relationship Assets = Liabilities + Equity Equity = Assets Liabilities

17 Understanding Debits and Credits Debits - Assets, Expenses - Liabilities, Equity, and Revenue Credits - Liabilities, Equity, and Revenue - Assets, Expenses

18 Working with Accounts, Customer, & Vendor Lists

19 Why are Lists Important t in QuickBooks? Most of what s involved when you enter transactions in QuickBooks is making selections from various lists.

20 Let s look at a check for example:

21 You must choose an account, a vendor name, possibly an item, and maybe a class. Each of them comes from a different list.

22 List Basics New list entries can be added at any time. List entries can be renamed at any time. In use list entries cannot be deleted, but they can be merged. List entries can be hidden by marking them inactive.

23 Chart of Accounts The Backbone of Your System Let each account represent a broad category of information. Resist the temptation t ti to set up sub-accounts for farm enterprises, classes are usually the better option. Let accounts represent categories of income and expense that are meaningful to you. Before adding a new account give it some Before adding a new account, give it some thought.

24 To display the chart of accounts:

25 1. From the Lists menu, choose Chart of Accounts (Ctrl A).

26 2. Scroll through the list.

27 To add an account:

28 1. In the Chart of Accounts, click the Account menu button and then choose New (Ctrl N).

29 2. In the New Account Window, choose the type of account (Income, Expense, etc). Default is current liability

30 3. Fill in Account Information, Opening Balance and Date. Click Save & Close when Finished. Note: You cannot enter opening balances for income and expense accounts, only balance sheet accounts.

31 Test: Repeat steps 1-4 by adding the following accounts: Chemicals Farm Chemicals Seed Equipment

32 To add a sub-account:

33 1. In the Chart of Accounts, click the Account menu button and then choose New (Ctrl N).

34 2. In the Type field, select Expense. In the Account Name field, type Herbicide. id

35 3. Select the Sub account of checkbox, and then select Chemicals from the list. Click Save and Close.

36 Test: Repeat steps 1-5. Substituting Insecticide iid for Herbicide.

37 Creating Customer & Vendor Lists Customers refer to people p who pay money to the business. Vendors refer to people whom the business pays money. Anytime you record the receipt of income (deposit), or the payment of an expense (check), you must identify a customer or a vendor.

38 Why Spend Time Entering Names? Identifying the customer or vendor by name adds useful fldtil detail and makes it easier to search for transactions. Supplying a mailing address lets you mail out checks or invoices in windowed envelopes. Having complete Customer and Vendor lists makes using QuickBooks faster and easier.

39 Adding Customer, Vendor, and Employee Names

40 To add a new customer: 1.From the Customers tb tab on top of fthe main menu window, choose Customer:Customer Center (Ctrl J).

41 2. Click New Customer and Job at the top left of the p list menu. Then choose New Customer.

42 3. Type in relevant information:

43 4. Fill in the Additional Info Tab if desired.

44 To add a new vendor: 1.From the Vendors tab at the top of fthe main menu window, chose Vendor:Vendor Center.

45 2. At the top left corner of the page, click New Vendor. Fill in relevant information. Can also add multiple vendors or import from Excel.

46 Vender List Example Add the Following Vender Company: Chemicals R Us Contact: Bill Scott Address: 428 Alpine Street Texline, TX Phone: (806) Credit Limit: $25,000 Account:

47 Other Ways to Manage Lists Sort lists Combine (merge) list items Rename list items Delete list items Make list items inactive Import/Export lists Print lists

48 Sort Lists Use arrows at the top of the list to choose the format you wish to see: Name: A-Z Z-A Bl Balance: Minimum Mii Balance Bl Maximum Balance Maximum Balance Minimum Balance Type: Income Stmt Accnts Balance Sheet Accnts Balance Sheet Accnts Income Stmt Accnts

49 Merge List Items 1. Highlight the account you want to be merged. 2. At the bottom of the list menu, choose Account:Edit Account (Ctrl E). 3. In the name box, type in the name of the account you wish to merge with. 4. The program will tell you the account name already exists, and ask if you want to merge them. Select Yes. CANNOT Note: A file with sub-accounts CANNOT be merged.

50 Merge Test: Merge the Farm Chemicals account with the Chemicals account.

51 Rename List Items 1. Highlight the account you want to be renamed. 2. At the bottom of the list menu, choose Account:Edit Account (Ctrl E). 3. In the name box, type in the new account name and click Save & Close.

52 Delete List Items 1. Highlight the account you want deleted. At the bottom of the list menu, choose Account:Delete Account (Ctrl D). 2. Remember that you can only delete accounts that have NEVER had any activity against them.

53 Inactivate List Items 1. Highlight the account you want to be inactivated. 2. At the bottom of the list menu, choose Account:Make Account Inactive.

54 Reactivate List Items 1. Check the Include inactive box at the bottom of the menu. 2. Reactivate by highlighting the inactive account and selecting Account: Make Account Active at the bottom of the list.

55 Test: Inactivate the Chemicals account, then reactivate it.

56 Importing/Exporting p glists It is possible to import any list from another QuickBooks file (filename.iif). It is possible to import a list (Customer, Vendor, Item or Account only) from a properly formatted Excel file into QuickBooks. You can also export a QuickBooks file (filename.iif) into Excel as a tab delimited file. This feature can be very useful when starting a new company, creating a list of accounts for your accountant, etc.

57 Exporting a List 1. Select File:Utilities:Export:Lists to IIF Files. Select which lists you wish to Export.

58 2. Select a file name and location, then click Save. Make Exporting a List sure you save the file in filename.iif format for ease of importing later.

59 Importing a List Saved in *.IIF Format 1. Select File:Utilities:Import:IIF Files. Select which list you wish to Import.

60 Importing a List in Excel Format 1. Select File:Utilities:Import:Excel Files.

61 A Few Notes About Importing/Exporting While you can import a file saved in Excel or *.IIF format, you can only export and save a file as *.IIF. We recommend that you only export/import one type of list at a time. ` When setting up a new company and using an imported Chart of Accounts, Customer List, etc., we recommend that you skip the Easy Step It Interview, and choose Other/None for your Chart of Accounts.

62 Printing Lists and Reports 1. At the bottom of the chart of accounts, select Account:Print List (Ctrl P). 2. To print a report on a certain account, highlight the account, then select Reports:Quick Report from the bottom of the list (Ctrl Q). 3. To print a whole farm report, select Reports:Reports on all Accounts.

63 Setting Up Classes: Enterprise Information & More

64 Classes Classes are most often used as enterprise codes, to match transactions with specific farm enterprises rather than the business as a whole. EX Corn Wheat Cotton Stockers

65 Classes There is no right or wrong way to set up classes, but class names should not serve more than one informational goal. The arrangement of class and subclass levels determines how easily you can get reports of specific information. Each class should usually represent a profit center or a cost center, or should be a parent class for a group of profit or cost centers.

66 Is Class Tracking Turned On? 1. Choose Edit:Preferences at the top of the main menu window. 2. In the Preferences window, select the Accounting icon in the scroll box on the left side. 3. Select the Company Preferences tab at the top. 4. Sl Select the Use class tracking check box. 5. Click OK to close the Preferences window.

67 How to Add Classes:

68 1. Open the Class List window by choosing Lists: Class List from the main menu.

69 2. Click on the Class button at the bottom of the window, then select New.

70 3. Fill in information about the new class. 4. Click OK or Next to save the new class in the class list.

71 Test: Add the following classes: 2013 (as a parent class) Corn (as a subclass) Sorghum (as a subclass) Wheat (as a subclass) Stockers (as a subclass)

72 QuickBooks Training Lesson Two

73 Forms and Registers Forms Checks Deposits Bills Invoices Registers Show all of the transactions entered in a particular account. Every asset, liability, and equity account has a register. Income and expense accounts do not.

74 Checks form Use the Checks form when you pay an expense directly by check. Do not enter a check to pay a previously entered bill.

75 How to Enter/ Write a Check:

76 1. Choose Banking: Write Check (Ctrl W).

77 2. Fill in the check #, date, payee, amount and account #, then click Save and Close.

78 Test: Write a check for $2,000 in Corn Herbicide to Chemicals R Us.

79 Bills and Credit Cards Use the Bills form Use the Credit Card to enter purchases Charges form to for which h payment enter farm business will be made at a purchases made by lt later date. dt credit card.

80 How to Enter a Bill:

81 1. Choose Vendors: Enter Bills

82 2. Fill in the fields as desired, then click Save and Close.

83 How to Pay a Bill:

84 1. Choose Vendors: Pay Bills. 2. Check the bills you want paid, fill in the information(double check Payment Account), then click Pay Selected Bills.

85 Test: Enter a Bill to Chemicals R Us for Wheat Herbicide on 12/15/2013. The amount is $2000, and there is a 1% 10 Net 30 Discount. Pay the Bill on 12/25/2013.

86 Printing Checks: 3 Ways

87 From the Checks Window 1. Make sure you have preprinted checks in the printer 2. Choose Banking:Write Checks from the main toolbar

88 From the Checks Window 3. Type in the required information: vendor, amount, etc 4. Choose the Print button.

89 From the Bills Window 1. Choose Vendors: Pay Bills from the main toolbar. 2. Choose the bills you want paid, then click Pay Selected Bills. 3. When the Payment Summary window appears, select Print Checks.

90 From the Main Menu Window 1. Make sure you have checks in the printer 2. From the menu, choose File:Print Forms:Checks

91 From the Main Menu Window 3. Sl Select the appropriate bank account and check number, place a next to the checks/bills you want printed, then click OK.

92 From the Main Menu Window 4. The next screen will allow you to make several choices about your printer and what kind of checks you have.

93 Cash Deposit The Easy Way The easiest way to handle a cash sale is to record the receipt of income by making a cash hdeposit. You can even add ddinformation in the deposit form s description field concerning transaction ti details.

94 How to Enter a Deposit 1. Choose Banking: Make Deposits from the main menu window.

95 2. Fill in desired fields and click Save and New or Save and Close to record your entry.

96 Test: Enter a deposit for $20,000 received from the Farmer s Coop for wheat sales on 7/25/13.

97 Automating Recurring/Memorizing Transactions

98 AutoRecall When you select a customer or vendor name, QuickBooks automatically fills in the rest of the form with the most recent transaction ti entered for that customer or vendor. AutoRecall is a feature that tis turned on by default when you install QuickBooks. If for some reason ith has been turned off, fffll follow these procedures:

99 AutoRecall 1. Choose Edit:Preferences from the main menu to open the Preferences window. 2. Click on the General icon in the scrollable box along the left side of the window. 3. Check the box marked Automatically recall last transaction for the name, then click OK. 4. You can also select Pre-fill fllaccounts for vendor based on past entries. This selection fills in vendor/account information, but not actual dollar amounts.

100 Memorizing a Transaction While memorizing a transaction is less necessary since the advent of Auto Recall, the need for this function still arises. To memorize a transaction, simply select the check, bill, deposit, etc. you want to memorize. Fill in the relevant information, then choose Ctrl M. Select how often you want to be reminded of the transaction. Automatic entry is also an option.

101 Reconciling Your Accounts

102 1. Choose Banking: Reconcile from the main menu.

103 2. In the reconcile window, select the account you want to reconcile, then enter the statement date and ending balance. Compare the beginning balance field with the beginning balance shown on your statement.

104 3. Mark all cleared transactions 11/30/ Check difference at bottom of screen. Discussion on account reconciliation through online banking is on pg. 77.

105 Farm Loan Basics

106 QuickBooks Loans - 2 Basic Types Current Liabilities are debts that must be paid within ihi a year. QuickBooks k has 3different current liability account types: Accounts Payable monthly bills Credit Cards Other Current Liabilities operating notes, etc. Long-Term Liabilities are debts to be paid off over more than one year. Ex. Machinery loans, breeding livestock, and land

107 Setting Up a Loan Account 1. Open the Chart of Accounts window (Ctrl A). 2. Open the New Account dialog (Ctrl N). 3. Fill in loan information, and click Save and Close.

108 Use caution when choosing the loan account ttype in the new account window.

109 Receiving Loan Funds First Example To receive loan funds,,you can record a deposit, or simply py transfer funds. To transfer funds: 1. Choose Banking: Transfer Funds from the main menu

110 2. Fill in the account the money will be transferred from (liability), and the account where the money will be transferred to (checking). Fill in the transfer amount, then click Save & Close.

111 Test: 1. Transfer $50,000 from the operating note account into the farm s checking account on 12/15/ Create two new liability accounts: Tractor Note Combine Note

112 Receiving Loan Funds Second Example Some cases involve entering loans when funds are not deposited into Farm Checking: Typical examples are dealer financing of machinery or input purchases, or owner financing of land. In this case, you must make a General Journal entry.

113 Making a General Journal Entry 1 Choose Company:Make General Journal Entries from 1. Choose Company:Make General Journal Entries from the Main Menu screen. You can also select the option from the Chart of Accounts.

114 3. Enter loan and other information in the General Journal,, then click Save and Close.

115 Test: Purchase a tractor for $155,000 from John Deere credit on 12/15/2013. There is no down payment or trade-in.

116 Test: Purchase a combine for $180,000 from John Deere credit on 12/15/2013. There is a $5,000 down payment and a $20,000 trade in.

117 Entering Loan Payments Simply pywrite a check. Be sure and separate the principle and interest amounts.

118 Loan Manager Features Add and remove loans you want to track View payment schedules Set up loan payments Analyze different loan scenarios NOTE: This feature is most useful for long-term liabilities (land, machinery, etc). It does not work well for operating debt.

119 Adding a New Loan Set up a liability account for the loan, and add the opening balance. Set up an expense account for tracking loan interest. Set up the lender if they are not already in your vendor list. If escrow payments are utilized, set up an escrow account. Make sure all transactions are current.

120 To Use Loan Manager From the Banking menu, Choose Loan Manager.

121 Adding a Loan to Loan Manager 1. In the Loan Manager window, click Add a Loan. 2. Enter account information.

122 Adding a Loan to Loan Manager 3. Enter payment information

123 Adding a Loan to Loan Manager 4. Enter interest information, then click Finish

124 Test: Set up a loan for the JD Tractor purchased on 12/15/2013. It is a five year (60 month) note financed at 7.00% interest compounded monthly. The next payment of $3,069 is due on 1/01/2014.

125 Paying a Loan in Loan Manager 1. From the Banking menu, choose Loan Manager. 2. Select the desired loan, and click Set Up Payment.

126 Paying a Loan in Loan Manager 3. Click Set Up Payment, enter principle p and interest amounts, etc., then click OK. Notes: If the principal i and interest is incorrectly calculated, entering the correct amounts will re-amortize the loan. If the current balance does not show up correctly, simply re-load loan manager.

127 Test: Set up a loan payment for the JD Tractor Note. It is a regular payment that will be paid by check.

128 Setting up a What If Scenario 1. From the Banking Menu, choose Loan Manager. 2. In Loan Manager, click What If Scenarios.

129 Setting up a What If Scenario 3. In the What If Scenarios Window, choose a scenario: a. What if I change my payment amount? b. What if I change my interest rate? c. How much will I pay pywith a new loan? d. What if I refinance my loan? e. Evaluate two new loans

130 QuickBooks Reports

131 QuickBooks Reports Summary reports Show a summary of transactions over a specified period of time (Profit and Loss Standard). Detail reports Show a list of all transactions that led to each account summary (Profit and Loss Detail).

132 Opening a Profit and Loss Report 1. Choose Reports: Company & Financial: Profit & Loss Standard.

133 Report Features Filtering Filtering involves specifying or limiting the set of transactions a report includes. You can use filters to limit transactions to a specific customer, vendor, account, class, month, week, day, dollar amount, and more.

134 Filtering Reports 1. Click on the Modify Report button at the top of the report window.

135 Filtering Reports (Cont.) 2. Click on the tab labeled Filters.

136 Report Features - Customizing Customizing involves creating a specified report format. You can select from a variety of options, including date ranges, cash vs. accrual formats, year to date comparisons, income/expense percentages, and more.

137 Customizing Reports 1. Click on the Modify button at the top of the report window. Select the Display tab.

138 Report Features - Memorizing After spending the time to customize your report to the desired settings, it is a good didea to have QuickBooks k memorize it. Doing so will save the report s settings in the Memorized Reports list, which can be recalled when needed.

139 Memorizing a Report 1. Click on the Memorize button at the top of the report s window. 2. Enter a name for the memorized report in the Memorize Report dialog.

140 Exporting Reports to Excel 1. Create the report you want to export from QuickBooks. For this example, choose Reports:Company & Financial: Balance Sheet Standard

141 2. Once the report is created, click the Export button at Exporting Reports to Excel 2. Once the report is created, click the Export button at the top of the report window.

142 Exporting Reports to Excel 3. A window will appear asking if you want to send the report to a new or existing spreadsheet. Select Export report to a new Excel spreadsheet

143 Exporting Reports to Excel 4. When you click Export, Excel will open showing your exported spreadsheet Exporting into Excel allows for inventory and depreciation adjustments, and report customization for your bookkeeper, accountant, etc.

144 Supporting Report Features Financial Performance Measures Formulas and Calculations on pg. 81. FARM Assistance Long-term planning tool that projects a producer s financial condition and evaluates the impact of proposed management decisions. Uses a one-on-one approach to assess a producer s financial future, and estimate costs and returns using forward price projections. For additional information, view the website at

145 Planning and Budgeting

146 Creating a Budget in QuickBooks 1 F th C h Pl i 1. From the Company menu, choose Planning and Budgeting, then Set Up Budgets.

147 Creating a Budget in QuickBooks 2. Click Create New Budget. Choose the year, then choose Profit and Loss or Balance Sheet. 3. If Profit and Loss is chosen, specify additional criteria of either Customer:Job or Class. 4. Choose if you want to create the budget from scratch or from previous year s data. 5. Click Finish. Note: The Adjust Row Amounts feature allows Note: The Adjust Row Amounts feature allows for % increases.

148 Creating a Cash Flow Projection 1. From the Company menu, choose Planning & Budgeting, then Cash Flow Projector.

149 Creating a Cash Flow Projection 2. Click Next on the welcome page. 3. Select accounts for your beginning balance. 4. Sl Select the projection method hdto enter your cash receipts. 5. Enter your business expenses. 6. Review and adjust your accounts payable. Note: This feature is not particularly useful to Note: This feature is not particularly useful to farming accounts.

150 Making End of Year Adjustments This feature can be found in the File section of the main menu. Don t forget to make adjusting entries for depreciation at the end of each year (we recommend letting your accountant do this).

151 Backing up Data This feature can also be found in the File section of the main menu. Use of a portable company file is recommended.

152 Contact Information DeDe Jones Texas AgriLife Extension Center at Amarillo Jay Yates Texas AgriLife Extension Center at Lubbock